Financing vs. Leasing

Financing vs. Leasing Your Vehicle at Langley Chrysler

What’s the difference between financing and leasing a vehicle? The answer boils down to use and ownership.

When you lease, you borrow a car for a set period at an established monthly fee. At the end of the lease period, you return the vehicle to your dealership for inspection. At this point, you may either turn the car in, resolving any costs incurred from wear and tear and excessive mileage, or you may negotiate the vehicle’s purchase.

Leasing can mean lower monthly payments while allowing you to drive a brand new car every two to four years. That means a newer car for less money each month. Additionally, leases are generally paired with manufacturer warranties that protect you against unforeseen repair costs.

When you finance, on the other hand, you pay a lender a negotiated rate during a finite period. While down payments and monthly payments may be higher compared to leases, you have the option to pay off your loan early. Vehicle financing allows you to enjoy the pride of ownership and is more frugal in the long run.

Which Option Is Right for Me?

The answer is up to you! Our Financial Services experts are available to help you find what’s right for your preferences, budget, and lifestyle, but there are a handful of important things to consider for yourself.

  • Is having a newer vehicle every two to four years with warranty coverage more important than the long-term costs associated with leasing and trade-in fees?
  • Are long-term cost savings more important than the monthly investment?
  • Is vehicle ownership more important than the short-term savings?

Financing and Leasing Explained

With financing, the loan includes the total cost of the vehicle, and there is no requirement on how many kilometers you drive. The financial loan has an interest rate that is determined by the financial institution, and the payments include all taxes and fees. The monthly or bi-weekly payments typically start the next month after the contract has been signed.

With leasing, the payments are determined by the cost of the vehicle, the number of years of the lease and the estimated kilometers driven. The interest rate is determined by the leasing company and the monthly or bi-weekly payments include taxes and any associated leasing fees. The first monthly or bi-weekly payment is required at the time of delivery.